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Canadian appeals court has rebuffed an attempt by the recording industry to unmask 29 people accused of unlawfully sharing thousands of music files.

The Federal Court of Appeal on Thursday upheld a lower court's ruling that said privacy rights must supercede the record labels' copyright claims, at least in "the early stages of this case."

In a 27-page opinion, the appeals court stressed that "technology must not be allowed to obliterate" intellectual property rights, but "the potential for unwarranted intrusion into individual personal lives is now unparalleled."

The ruling is hardly the end of the matter. Instead, it effectively lays out what kind of legal standard the Canadian Recording Industry Association (CRIA) must meet in future lawsuits against accused peer-to-peer pirates.

"If the U.S. experience is any indication, we can expect thousands of suits against individual Canadians in the months ahead," University of Ottawa law professor Michael Geist wrote in an analysis. "There is now every reason to think that Canadians will be subjected to a similar legal barrage."

In 2004, a lower court declined to order five Internet service providers--Bell/Sympatico, Rogers Communications, Shaw Communications, TELUS and Videotron--to identify subscribers that CRIA had accused of trading files illegally. CRIA appealed the decision, and arguments were heard in April.

In Thursday's ruling, Justice Edgar Sexton gently chided the lower court for reaching a sweeping decision about whether music file swapping was legal. "In my view, conclusions such as these should not have been made in the very preliminary stages of this action," Sexton wrote. "Such hard conclusions at a preliminary stage can be damaging to the parties if a trial takes place and should be avoided."